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Owe more than it's worth... I'm upside down and I can't get up!

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Comments

  • kyfdxkyfdx Everywhere, USAPosts: 122,800
    Is this even available on the G6? I thought it was only for '04 models?

    I think the problem was your choice of econobox, not the fact that the Cavalier is small or economical.. It is just a crappy car.

    There are plenty of "econoboxes" out there that will be in great shape for six years.. though, I doubt GM makes any of them.

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • audia8qaudia8q Posts: 3,138
    every mfg captive finance source we have right now is buying very deep on new cars...This week I have seen some outlandish approvals. one guy got approved at 0% for 60 months who 4 months ago couldnt get approved at any rate on any car.
  • driftracerdriftracer Posts: 2,692
    That F-350 is MINE!
  • louie_jlouie_j Posts: 11
    I have a 2002 Nissan Sentra GXE (36,000 miles) that I bought new in March of 2002. About half way through the loan now. I still owe about $8000 on the loan. The trade-in is suppose to be somewhere around $6500.

    I'm looking to trade it in for two reasons. First, this incarnation of the Sentra is not as "robust" as the last one I had and don't think it will last as long. Would like to trade it before things start "happening" to it. Second, I recently got married and I need a car tha my wife can drive. The Sentra is a 5-speed and the new car would be an automatic.

    The payment isn't a problem ($311/month). I'm just looking to get a different car. Same payment would be fine. As far as negative equity goes, the difference ($1500 in this case) is just added to the price of the new car, right? Meaning, if I went and bought a car for like $12,500, the total purchase price would be $14,000, right?

    I know I need to keep the "new" car for a long time to make this work. I plan on getting a '02 or newer Civic, so I know we'll have it for a while.

    Advice?
  • stickguystickguy Posts: 32,610
    teach your wife to drive a stick. Problem solved. Either she will be able to drive the Sentra, or you will end up divorced ;-)

    Anyway, the current Sentras are still supposed to be pretty reliable. I wouldn't worry about it falling apart at 36K.

    As to your real question, if you trade it in, any negative equity has to be made up someplace. You either pony up the cash, or sometimes it can be buried into the payment on the new car. The problem with that (if you can pull it off) is that the negative equity snowballs, since whatever you buy will depreciate once you drive it off the lot.

    2 suggestions: post the details on "real world trade in values" thread, and Terry can give you an accurate idea of what it is worth (remember, the books don't buy cars). You also might want to consider selling it yourself. It could end up being a better move financially.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • kyfdxkyfdx Everywhere, USAPosts: 122,800
    stickguy makes several good points.. (though teaching your new wife to drive a stick...yowza!)

    1) Sell this car yourself... You might be able to get $8K out of it.. then you are free and clear to buy whatever makes sense..

    2) Even if your car doesn't feel as solid as you would like, it is not likely to be much of a problem.

    3) Don't trade unless you have the cash to make up the negative equity.. That just starts you down the long road to automobile servitude. Just because someone will lend you more money than a car is worth, doesn't mean you should do it.

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • stickguystickguy Posts: 32,610
    don't hit refresh since it causes double posts to appear.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • louie_jlouie_j Posts: 11
    Sorry about the double post. lol

    Unfortunately, the wife isn't very hand-eye coordinated. I doubt she could learn to drive a stick. She has enough trouble learning to drive as it is. I'm sure I'd be replacing a burned-up clutch shortly after teaching her to drive. :(

    How do you sell a car that you own money on?? With the price of a used '02 Sentra being almost what I owe on mine, how do I get someone to buy it? One of my least favorite things is privately selling a car. Sometimes I think I rather just eat the $1500 and be done with it.

    I've done some rough calculations and if I deduct my negative equity from my trade in value (meaning if trade in is really $6500, use $5000 as the actually amount of trade) a $13,000 car comes out to almost what I'm paying now a month (assuming I did my math right). I can live with that.
  • stickguystickguy Posts: 32,610
    if the trade in value is $6,500, the actual value to your deal is -1,500. That is, it will cost you that much to have them take it.

    Selling with a loan has been discussed a few times around here. I haven't done it myself, but it can be done. You either need to work out something with the buyer and lender to have them essentially pay it off for you and wait for the title, or pay it off yourself (through some kind of s/t borrowing or dipping into savings). If you are lucky, a bank holds the note, and you can do the transaction and get the title locally. Otherwise, there will need to be some kind of faith or patience on one side of the deal.

    To me, getting the thing paid off and having the title in hand is just mucl less of a PITA. Selling a car privately where you can sign the title on the spot is a nice selling point.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • lemkolemko Philadelphia, PAPosts: 15,306
    I would go for at least a Buick LeSabre. I wouldn't look at any of those econoboxes under any terms or conditions. If all I could afford new was some rattletrap Cavalier, I'd look at getting a more substantial used car.

    As for the 2002 Sentra, I wouldn't worry about the car falling apart @ 3 years and 36K miles. Fifteen hundred in the hole isn't bad compared to what people who buy Kias and Hyundias end up at the end of the same period and miles. I'd just pay it off to the end of the term and be done with it.
  • janzjanz Posts: 129
    I recently read an article in USA Today that said this was a really bad financial move. For the following reasons:

    1) In 2 mos. an '04 model will already be one year old.
    2) Low payments over 6 years will build your equity VERY slowly.
    3) Most domestics models depreciate fairly quickly.
    4) If you do happen keep the car long enough to be paid off, it will be 7 years old.

    Again a personal decision, but the point was that this is another way to end upside down. It might be interesting to do the math if on making larger than minimum payments, but I doubt most people would consider that.

    Just my .02
  • driftracerdriftracer Posts: 2,692
    the people who can qualify for it don't need it - at all...

    It's an advertising gimmick - it gets people in who can't qualify for 0% at 72 months, gets them interested in a vehicle, a test drive, an "I'm sorry, you don't qualify" speech, and a "here's the rate you qualify for" briefing - and they buy the car - GMAC didn't lose a DIME on that one!

    The people who do take it while transferring their money from soemwhere else would have paid cash or done home equity anyway - easy way to drum up some business. Also, the 0% is in leiu of those huge rebates....
  • I traded in my 1999 Chrylser Town and Country for a 2004 Envoy XL but must admit I did not do as much research as I should have. The payment is about $100 more than my Mini van was and increase in the insurance is astronomical. Combine that with the poor gas mileage and I'm strapped. I'm at a loss and don't know if there's a way for me to get out of this vehicle. I just made my first payment in Sep 04. Anyone ever found themselves in this situation and have any suggestions on what I can do? Thanks.
  • corvettecorvette United StatesPosts: 6,700
    It comes down to how much you owe on the Envoy and how much the Envoy is worth. If you owe $5000 more than it's worth, you will have to come up with that much money to sell the car outright. A car dealer might roll some of that difference into a new car, but financing companies are very strict about what percentage of a new car's retail value they will finance. If you're looking to reduce recurring expenses, your best bet is to pay down what you owe on the Envoy until you owe less than it's worth, and trade it in on a more economical used car, whose operating costs you have investigated before purchase.

    If the poor gas mileage compared to a minivan is making that much of a difference, I would guess you are putting a lot of miles on the car. Besides the gas expenses, this will further reduce the resale value.
  • ghuletghulet Posts: 2,628
    ...doesn't anyone do RESEARCH before they buy a vehicle (like checking EPA figures and calling their insurance company for rates)? Sorry, not trying to be mean or 'rub it in', but still!
  • I just can't believe the horror stories that I'm reading here. That many thousands of dollars upside down. And its usually from a financial / car choice previous mistake that from what I read they turn around and make again!

     

    I was close once, I had traded in a Fiero with non functioning AC and a broken drivers side mirror on a TEMPO of all things. I quickly decided that the car was not going to make it through the 3 year loan. I went back to the ford dealer and he gave me a song & dance about negative equity, etc, so I went to a saturn dealer, same song, different dance (or was it same dance, different song). Then I got a Buick ad in the mail with a $500.00 rebate good thru the end of the year (it was Nov 1991). I bought a LeSabre, GREAT car, NO negative equity, net financed was about 20,000 4 yrs @ 3.9 APR. I kept the car for 8 yrs and 175,000 miles (it still ran and looked great)and got nearly 3,000 in trade allowance on my next car (1995 Fleetwood), which I now own clear. I only traded the LeSabre because I wanted a better tow car (I don't do trucks).

     

    Other than that I never even fathomed having any "negative equity" on any car purchase. We've kept our cars for at least 3 years (easy for me, not so easy for my wife) and this probably helped. We drive a lot, that probably doesn't help, not having dug a hole in the first place was probably the best thing.
  • mac24mac24 Posts: 3,910
    The problem is usually caused by being unable to differentiate between what you want, and what you need!
  • driftracerdriftracer Posts: 2,692
    that people aren't perfect, astute business people, like many claim to be.

     

    On an internet forum, I could claim to be Superman, or to have paid $6k under invoice for a 2005 Acura RL, but neither would be true.

     

    I'll make a suggestion - instead of rubbing people's nose in their mistakes and bragging about how much better you've handled things, reserve judgement for things in your own circle.
  • driftracerdriftracer Posts: 2,692
    it was designed like that. People jump into Edmunds all the time, touting their prowess as car buyer Gods, telling what I believe are partially concocted war stories about how they really pulled one over.

     

    This makes the average Joe who comes here for information and advice feel like an idiot, and I'm sure that's not Edmund's concept of service to their readers.

     

    One poster is publishing these "check me out, I did this and I did that" posts, while maintaining that a domestic vehicle with a formerly great, but currently flawed history, and depreciation/value that drops like an anvil on Jupiter is the only vehicle on the planet worthy of ownership.

     

    Can we ease up on the bragadocious flair?
  • mac24mac24 Posts: 3,910
    I don't think your post was aimed at me, but I take the point anyway.

     

    However, I do think that a lot of this hole digging is done because of the feeling that, for whatever reason, I deserve a brand new Speedmobile (or whatever), rather than thinking that I need to keep this Junkmobile for another three years to get myself back to a level playing field.

     

    Criticising someone for that attitude is very different than doing so because they are in difficulties because of circumstances beyond their financial control.
  • driftracerdriftracer Posts: 2,692
    and greatest, lest their neighbors, family, and friends would think they're impoverished.

     

    I spent 10 years in the Air Force and noted a general, sweeping stereotype of many military folk. While many were content to have a 3-4 year old decent ride and feed their families, so many had to have things beyond their reach. This certainly spreads into the rest of society, but in the military, it's especially ironic, since you know exactly what your neighbor (in base housing) or roomate (in the dorm) makes, down to the penny, given that you know their rank (easily obeserved) and time in service (easily figured out).

     

    In 1988, at Dyess AFB, as a SSgt, I couldn't be thought of as impoverished, so I had a 1987 Toyota Corolla FX-16 and a 1988 Mustang GT. I also had two part-time jobs, no days off at all, and only one evening off per week, where I spent worrying about how we'd pay the bills.

     

    It's an easy trap to get into.

     

    Being upside down in a car is very common, and mostly accepted in society. My previous comments were designed to hopefully pull some of the air out of other's comments that were fairly insulting, yet based on skewed data and ideas.
  • mac24mac24 Posts: 3,910
    That's funny about the military folk. Visably living beyond your income has got to either invite pity ("I guess he just can't control himself!"), or suspicion ("I wonder if he had anything to do with that missing tank!").

     

    After a couple of painful mistakes early in life, I learned that I sleep much better if I spend a little less than my income.
  • boomer1bboomer1b Posts: 348
    Folks RUN and get into a financial transaction.

    (car, house, whatever)

    Then end up over their head and whine about it in a public forum ????????

     

    Some comments both good and bad are deserved !!!
  • cdnpinheadcdnpinhead Forest Lakes, AZPosts: 4,569
    It's not so much what's wanted vs. what's needed as it is what's wanted vs. what can be afforded.

     

    Need is a very subjective term in the car world.

     

    Transportation is nearly never what it's about.

     

    "You are what you drive" is the mantra on the west coast, and elsewhere, it appears.

     

    I've had tons of fun in rental crap because I just enjoy driving. Driving something nice is better, but driving at all is the deal. Most don't share this point of view.
  • jlawrence01jlawrence01 Posts: 1,828
    Driving ANYTHING beats walking or waiting at night in subzero weather for a city bus. Been there, done that.
  • steine13steine13 Posts: 2,706
    "I understand that being upside down on a car loan is completely acceptable in society. (I just wish the radio commercials were a bit less obnoxious.) Those in the auto industry thrive on this perpetuated state of affairs."

     

    I dunno about "acceptable" and if it matters. It's a fact that lots of people are upside down, maybe half.

     

    But whether the auto industry "thrives" on this -- it's a difficult question. Lots a people are trading too soon, and rolling "negative equity" into the new car. How often can you do that before the dealer says, sorry, need $$ or I can't do it? For many folks, they're done trading until they can find some cash.

     

    A lot of cash was found by refinancing houses. That's gonna get tougher as interest rates rise. Without outside cash, the domestics have a huge edge by giving $4-5k rebates to hide the negative with... that is one reason the big rebates continue... I don't know if you could bury $4k neg in a Camry, where it would be safer than in a Mitsubishi, say.

     

    IF more and more people find they can't trade anymore because they are too far in the hole, that is going to affect the domestics in a huge way. What do the salespeople around here think? Do you have to turn people away more often? Do you see this as a big problem for the next coupla years?

     

    As a friend of mine likes to say "Where would the world economy be if the American consumer behaved responsibly?"

     

    -Mathias
  • jlawrence01jlawrence01 Posts: 1,828
    ***I see generally good advice being given, but it's not emphasized enough, KEEP your car until your negative equity is gone is almost always the BEST course of action, but from what I read, not often followed.***

     

    The BEST course of action is to keep your ride until you have your **NEXT** car paid for ...
  • The only thing you can do is to continue to make payments on this vehicle. You do not want to mess up your credit history, even if your credit is not the best, one of the worst things you could possibly do to your credit is file bankruptcy or get a reposession. If you care about your credit your option would be to first make sure that you have a good history with your finance company if you do, you have more room to negotiate a better percentage on the loan. 2nd make sure that you know what payment would be comfortable for you if you think 300 would be a great payment then tell the lender what you are looking to do. If they approve your request this may add a few more months to your contract but at least you will feel a whole lot better paying 300 per month over 456 a month. That way if you have a repair you wont feel like you are so upside down. Try that first and then let me know what happened.
  • driftracerdriftracer Posts: 2,692
    automotive lenders don't refinance car loans, and going through the person's bank or credit union requires proper structuring of the loan, meaning the loan amount has to be in line with value, and you're already buried, the amounts don't, and won't match.

     

    Great idea, just not very feasible.
  • cdnpinheadcdnpinhead Forest Lakes, AZPosts: 4,569
    Absolutely.

     

    Discipline actually works.
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